Corporate Insiders And Managers Of Long Island Boiler Room Indicted For Orchestrating $147 Million Stock Manipulation Scheme Involving Publicly Traded Companies
Defendants Made Millions By Artificially Inflating The Companies’ Stock And Inducing Elderly Investors To Purchase That Stock
A nine-count indictment was unsealed this morning in federal court in Brooklyn, New York, against 14 defendants: Jeffrey Chartier, Stephanie Lee, Lawrence Isen and Robert Gleckman, insiders and marketers of five publicly traded companies whose stock the defendants manipulated; Erik Matz and Ronald Hardy, managers of My Street Research and its predecessors (the “Boiler Room”); Brian Heepke, Dennis Verderosa, Emin L. Cohen, Paul Ewer, McArthur Jean, and Sergio Ramirez, Boiler Room cold-callers; Anthony Vassallo, owner of Elite Stock Research (“ESR”); and Robert Gilbert, owner of Accredited Investor Preview (“AIP”).
The charges include conspiracy to commit securities fraud, conspiracy to commit wire fraud, conspiracy to commit money laundering, and substantive securities fraud in connection with the stock manipulation of five publicly traded companies – National Waste Management Holdings, Inc., trading under the ticker symbol NWMH; CES Synergies, Inc., trading under the ticker symbol CESX; Grilled Cheese Truck, trading under the ticker symbol GRLD; Hydrocarb Energy Corporation, trading under the ticker symbol HECC; and Intelligent Content Enterprises, Inc., trading under the ticker symbol ICEIF. In addition, the government restrained Matz’s residence in Mt. Sinai, New York, Isen’s residence in San Diego, California, and a co-conspirator’s residence in Hicksville, New York, and seized bank accounts containing alleged criminal proceeds and automobiles purchased with alleged criminal proceeds.
Matz, Hardy, Heepke, Verderosa, Cohen, Ewer, Jean, Ramirez, Vassallo, and Gilbert will be arraigned this afternoon before Magistrate Judge Robert M. Levy, at the United States Courthouse in Brooklyn. Chartier’s and Gleckman’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for this afternoon at the United States Courthouse, 312 North Spring Street, Los Angeles, California. Lee’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for this afternoon at the United States Courthouse, 801 North Florida Avenue, Tampa, Florida. Isen’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for this afternoon at the United States Courthouse, 333 W. Broadway, San Diego, California.
The indictment was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“As alleged, the defendants designed an elaborate, fraudulent scheme, to defraud the investing public, preying, in particular, upon unsuspecting and elderly investors. Specifically, the defendants obtained shares from corporate insiders at below-market prices and engaged in manipulative trading patterns to drive up the price of the shares, while aggressively and repeatedly calling and emailing victims to purchase those shares,” stated Acting United States Attorney Rohde. “Today’s 14 arrests, in three states, reflect the scope of this fraud and our commitment to aggressively locating and bringing to justice those who abuse our financial markets in order to fraudulently enrich themselves.” Ms. Rohde expressed her grateful appreciation to the FBI and the United States Securities and Exchange Commission for their significant cooperation and assistance in the investigation.
“Manipulating stock prices, as alleged in this case, to appear more attractive to investors, is a deliberate attempt at sabotaging fair market trading,” stated Assistant Director-in-Charge Sweeney. “And manipulation, at its core, is a true act of deception, especially when the elderly are targeted. This scheme involved an incredible amount of money, more than $147 million. That's no small change for even the savviest investor. As evidenced by our arrests today, we take these matters seriously, and will continue to pursue those who make victims out of unwitting participants in these schemes.”
As alleged in the indictment and court proceedings, between January 2014 and July 2017, the defendants, together with others, engaged in a $147 million scheme to defraud investors and potential investors in, among other companies, one or more of the following publicly traded companies: NWMH, CESX, GRLD, HECC, and ICEIF (collectively, the “Manipulated Public Companies”), by artificially controlling the price and volume of traded shares in the Manipulated Public Companies through, among other things, (a) artificially generating price movements and trading volume in the shares, and (b) material misrepresentations and omissions in their communications with victim investors about the stock of the Manipulated Public Companies, relating to, among other things, the advisability of purchasing such stock. To execute this scheme, the defendants fraudulently concealed their control of shares of the Manipulated Public Companies that were held in brokerage accounts in the names of other individuals or entities. In addition, in or about and between 2014 and 2017, defendants Chartier, Lee, Isen, Matz, and Hardy engaged in a scheme to launder approximately $14,714,493 in proceeds of the foregoing stock manipulation schemes.
The Stock Manipulation Scheme
In order to carry out the fraudulent pump and dump scheme, employees of the Boiler Room based in Melville, New York, obtained shares from insiders at the Manipulated Public Companies, including the defendants Chartier, Lee and Gleckman, at below-market prices through stock purchase and consulting agreements. Once employees of the Boiler Room obtained shares in the Manipulated Public Companies, the defendants engaged in manipulative trading patterns including wash trades and matched trades to drive up the price of the shares, while aggressively and repeatedly calling and emailing victims – many of whom were senior citizens – to purchase shares in the Manipulated Public Companies. When victims indicated a willingness to purchase a recommended stock, the defendants and their co-conspirators at the Boiler Room called the victims repeatedly, pressured them to follow through with their purchases and directed them to log into their trading accounts while still on the telephone to place purchase orders for the relevant stock. Many of the victims ultimately purchased stock in more than one of the Manipulated Public Companies. In some cases, the Boiler Room also charged the victims for “subscriptions” to receive stock recommendations.
The defendants did not disclose to the victims that, contemporaneously with or shortly after their recommendation to the victims of the stocks of the Manipulated Public Companies, the defendants and their co-conspirators sold their own shares in the same companies. The victims therefore were left with the false and misleading impression that the stocks of the Manipulated Public Companies were sound investments in which the defendants and their co-conspirators themselves firmly believed.
The defendants’ deceptive practices included using false names or the names of co-conspirators instead of their true names during their communications with victims. The defendants Matz, Heepke, Cohen and Jean most frequently employed those tactics by providing false names to victims and by using email addresses in other individuals’ names when communicating with victim investors. In addition, the defendants directed and controlled trading in shares of the Manipulated Public Companies in brokerage accounts with names that were not associated with themselves or the Boiler Room. Such trading, which included matching trades of both victims and co-conspirators as part of the scheme to manipulate the stock of the Manipulated Public Companies, appeared not to be linked to the defendants or the Boiler Room.
The Money Laundering Scheme
Between 2014 and 2017, the defendants Chartier, Lee, Isen, Matz and Hardy engaged in a scheme to launder approximately $14,714,493 in proceeds of the fraudulent schemes to manipulate the share prices of NWMH, CESX, GRLD, HECC and ICEIF. They laundered proceeds of their pump and dump schemes by transferring the proceeds from brokerage accounts that they and their co-conspirators controlled through, among other things, bank accounts in the names of companies controlled by the co-conspirators and other individuals, or by generating invoices to lend the appearance of legitimacy to the transactions.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Alicyn L. Cooley and Patrick T. Hein are in charge of the prosecution. Assistant U.S. Attorney Tanisha R. Payne is handling the forfeiture aspects of the case.
Residence: Los Angeles, California
Residence: St. Petersburg, Florida
Residence: San Diego, California
Residence: Tarzana, California
Residence: Mt. Sinai, New York
Residence: Port Jefferson, New York
BRIAN HEEPKE, also known as “Brian Targis”
Residence: Farmingdale, New York
Residence: Coram, New York
EMIN L. COHEN, also known as “Ian Grant”
Residence: Coram, New York
Residence: Farmingdale, New York
Residence: Massapequa, New York
MCARTHUR JEAN, also known as “John McArthur”
Residence: Dix Hills, New York
Residence: Cold Spring Harbor, New York
Residence: East Meadow, New York
E.D.N.Y. Docket No. 17-CR-372 (JS)